Week of November 9, 2009
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Headlines At a Glance
  • Investors See Mortgage Rates Rising as Fed Wraps Up Buys
  • Fed Signals a Rate Rise Is Far Away
  • From Home Owner to Tenant; Fannie Mae Program Allows Those Facing Foreclosure to Rent Their Home
  • Report: 11 States Emerging From Recession
  • Bathroom Work Tops Senior Home Makeover Needs
  • For $490,000 You Get Four Bedrooms and Three Baths in Queens

    Investors See Mortgage Rates Rising as Fed Wraps Up Buys

    Some bond investors are expecting mortgage rates to rise as the Federal Reserve finishes its planned purchases of nearly $1.5 trillion in mortgage-related bonds sold by Fannie Mae, Freddie Mac and Ginnie Mae, yet another risk to the fragile U.S. economy. Since the central bank said nearly a year ago it planned to buy up privately held mortgage-related bonds, eventually becoming the largest buyer of mortgage-backed securities, mortgage rates have tumbled to just over 5% from more than 6%. The Fed has already finished the bulk of the purchases, which are expected to end in March. The Federal Open Market Committee last month said it will slow the pace of its mortgage-bond purchases “to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010.” Some investors say other buyers will replace the Fed in the mortgage markets, keeping rates low. “The mortgage rate may drift higher but not markedly so,” said Robert Tipp, chief investment strategist at Prudential Fixed Income Management, which oversees more than $200 billion of bonds. “The Fed is hoping it will be able to slink away from the mortgage-buying program without creating any major waves in the market,” said Tipp. “I think they will generally succeed.” Also, the Fed will continue to be vested in keeping borrowing accessible. If mortgage rates increase significantly — by three-quarters of a percent to 1.25% from current levels — “the Fed would be looking at ways of bringing rates down,” he said. “They won’t stand idly by.” (www.marketwatch.com)
    MarketWatch (11/3/09); Deborah Levine

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    Fed Signals a Rate Rise Is Far Away

    The Federal Reserve signaled on Nov. 4 that it was not close to raising interest rates, saying that the economy remained weak even though the recession appeared to be over. The central bank said it would keep its benchmark interest rate at virtually zero, and it made no change to its longstanding mantra that economic conditions were likely to warrant “exceptionally low” rates for “an extended period.” For practical purposes, analysts said, policy makers are still at least six months from tightening monetary policy. The central bank did make a tiny reduction in its effort to prop up the mortgage market. It said it would buy slightly fewer bonds issued by agencies that guarantee home loans — $175 billion, rather than $200 billion it originally expected. But it said the change stemmed from a shortage of such securities. The Fed made no change to its much bigger program to buy $1.25 trillion worth of mortgage-backed securities by the end of next March. (www.nytimes.com)
    New York Times (11/5/09); Edmund L. Andrews

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    From Home Owner to Tenant; Fannie Mae Program Allows Those Facing Foreclosure to Rent Their Home


    Under Fannie Mae’s newly announced Deed for Lease Program, qualifying home owners facing foreclosure and not eligible for a work-out solution will be able to stay in their homes as renters. Participating borrowers voluntarily transfer their property deed back to the lender; the lender then leases the house back to the borrower at a market rate for up to a year. After the period is up, there’s a possibility of a term renewal or a month-to-month lease arrangement. To qualify, the home must be the borrower’s primary residence, and they need to be released from any subordinate liens on the property. The borrower also has to document that the new market rental rate doesn’t exceed 31% of their gross income.(www.marketwatch.com)

    MarketWatch (11/5/09); Amy Hoak


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    Report: 11 States Emerging From Recession

    Alaska, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, South Dakota and Washington, D.C., are in recovery, according to Moody’s Economy.com. It determines where a state is in the recession based on employment rates, home prices, residential construction and manufacturing production figures. The firm also reported that, as of September 2009, Nevada remained firmly gripped by the worst recession because these indicators were still dropping significantly due to the plunging tourism, gambling and construction industries. The rest of the states, while still in recession, have seen the pace of their decline slow down, or moderate. Many of the 11 states identified as recovering were spared the worst of the downturn because their housing prices stayed relatively stable, said Steven Cochrane, managing director of Moody’s Economy.com. None saw the spike in foreclosures that ravaged Nevada, Arizona, California and Florida. Also, their unemployment rates, while high, have mostly stayed below the national average and have started to stabilize. By contrast, the states slammed by the housing crisis likely have another six to nine months of recession to go, Cochrane said. Industrial states, such as Michigan and Ohio, could also lag in the recovery as the auto industry upon which they rely heavily struggles to reinvent itself. (www.stateline.org)
    Stateline.org (11/5/09); David Harrison

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    Bathroom Work Tops Senior Home Makeover Needs

    Making bathrooms friendlier to older home owners tops the list of important projects to help people remain in their homes as they age. Angie’s List has more than a million consumers in its local networks providing their experiences and recommendations of favored contractors and service providers. It polled participating contractors and found that the four most requested bathroom improvement projects were the installation of grab bars in the shower-bath area, replacement of a bathtub with a walk-in shower-tub, installation of bathroom vanities with space underneath to accommodate a wheelchair, and the lowering of electrical switches to make them easier to reach. While cost is always important, the first priority for bathroom safety is that the modifications perform as advertised. NAHB and AARP helped develop a three-day training program that conveys a CAPS (Certified Aging in Place Specialist) designation. They’ve also developed a CAPS locator tool. “Handicap-accessible shower stalls, when converted from tub installations, can range anywhere from $1,8000 to $5,500,” says Dan McClure, from Mansfield, Texas, “again depending on a wide range of materials selections as well as the degree of difficulty in making the renovation to existing structures.” He says toilet change-outs generally range from $285 to $485, and grab-bar installations range from $65 to $95. The total cost of a complete “aging-in-place” bathroom can begin at $10,000 and move up from there. However, like all home projects, the sky’s the limit, depending on personal tastes. Angie’s List heard of one set of grab bars that cost $7,000 just for the bars. (www.usnews.com)
    U.S. News & World Report (11/3/09); Philip Moeller

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    For $490,000 You Get Four Bedrooms and Three Baths in Queens

    With so many well-groomed apartments for sale, fixer-uppers are not the darlings of the New York City real estate market right now. But when there is a lot of inventory on the market, the price gap between the renovated and unrenovated often grows. “What you see now,” said Jonathan J. Miller, the president of the appraisal firm Miller Samuel, “is more of a premium placed on renovated space because you have more supply, more choices.” But some buyers look at a wrecked apartment and see an opportunity. Brokers say those buyers are digging through listings and searching for places that, in exchange for “tender loving care,” provide an incentive to buy — a good price, a great location, a spot in a renowned building or an extra bedroom. A classic example of a fixer-upper is now on the market in Queens. The apartment, in a 1922 Jackson Heights co-op building called the Chateau, has four bedrooms and three bathrooms and is listed for $490,000. The apartment has high ceilings, lots of light, a working fireplace and nice original detail. But the floors need to be sanded and polished, the electrical wiring updated and the bathrooms and kitchen gutted. The walls, covered in a variety of elaborate wallpaper, also needed work. The apartment is on the second floor of the six-story building. The same size apartment in better condition on the floor below sold in May for $645,000. According to the broker, Michael P. Carfagna of MPC Properties, the higher-priced unit was renovated with high-end finishes about 10 years ago and has been well maintained since. The people who bought that place, he says, saw the cheaper one upstairs but decided against the hassle of a big project. Rick Wohlfarth, the president of the real estate brokerage Wohlfarth & Associates in Manhattan, says most of his clients aren’t interested in renovating. (www.nytimes.com)
    New York Times (11/1/09); Elizabeth A. Harris

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    Save at Least 60% on Select FedEx Shipping Till Nov. 15
    GM’s Authorization Process Just Got a Lot Easier
    FTD Offers 15% Discount to NAHB Members

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